What is capital demanding?

Capital Intensive concerns an effort or project that requires a large amount of capital. A project or business that is demanding is often a much greater risk because more cash investment or tangible assets are required. In general, many businesses or projects that produce tangible goods require more capital than service companies; Although some efforts in these companies are more demanding than others. A huge amount of money must be spent in order to undergo such a product. The rights to land or oil must be purchased and exercises, sets and other expensive equipment must be purchased. This requires large cash expenses.

For example, compare this to an individual who is starting to do business as a project management or as a freelance writer. In such a business, an individual offers small equipment and a small start-capital. For example, they may need to buy a computer or business cards or create a web. That in generalcontributes to several hundred dollars; Nowhere close to what it would cost a business to engage in oil efforts.

often in capital business there are savings of the extent. This means that the vast majority or most large capital investment is simply necessary to obtain the first unit of goods or to get the business from the country. The actual project costs are generally reduced, the more the product or units are produced.

In the example of oil drilling, a large investment is a initial purchase of land and drilling equipment. This large investment was made before the first drilling. Once the oil is hit on the land, it will cost very little more money to continue the oil extraction; The same drilling device and the same soil are used. The more good it created the initial investment of capital, the lower the actual cost of investment.

in general is a new company that is kaDrinkal -demanding, much more risky. Since it may be difficult to know how much good original heavy investment will lead to production, there is a chance that a large initial investment could be lost. Therefore, when investing in a starting company or starting your own capital, a factor is important to consider.